March 2, 2007

Corp Fin Issues Exemptive Letter on 409A Tender Offer Prompt Payment Issue

At the top to the year, I blogged extensively about issues arising from tender offers for backdated options. One of the issues related to the “prompt payment” requirement in the tender offer rules (because new Section 409A of the Internal Revenue Code requires that any cash amounts paid in connection with an option repricing be paid in the year after the option repricing; a requirement which contravenes the SEC’s prompt payment rules).

Yesterday, Corp Fin’s Office of Merger & Acquisitions issued the first exemptive letter – to CNET Networks – relating to Section 409A and the tender offer prompt payment rules.